12.4 C
December 3, 2021

Belgium nationalizes part of Dexia bank for USD 5.4 bln

The Belgian state will buy the national subsidiary of embattled bank Dexia for USD 5.4 bln as part of a wider bailout of the lender, the first banking victim of a new squeeze in European credit markets, CBS News reports. The part-nationalization of Franco-Belgian Dexia, announced Monday, was triggered by other banks’ increasing reluctance to lend to it due to its exposure to highly indebted eurozone states like Greece and Italy and to struggling municipalities in the United States. Belgium’s caretaker prime minister Yves Leterme said the nationalization was necessary to insulate the Belgian retail bank from the risks of the wider group, Dexia SA. He said support from the state ensures that all of Dexia’s clients “can be sure and certain that their money is in full security.” On top of the nationalization, the governments of Belgium, France and Luxembourg together will provide an additional USD 121 bln in funding guarantees for the bank for up to 10 years. Belgium will provide 60.5 percent of these guarantees, 36.5 percent will come from France and the remaining 3 percent from Luxembourg. At the same time, Dexia’s board is in negotiations with French banks Caisse des Depots et Consignations and La Banque Postale to find a solution to the financing of French local authorities, in which Dexia plays an important role.

Related posts

Videanu: Alro to receive energy at price pegged to aluminium listing


Vosganian: Local administrations have money for salaries only until August


FinMin Citu: Gov’t won’t cut money from investments to implement law on doubling child allowances